On Tuesday Facebook unveiled a digital currency project called libra, which will be launched in the first half of 2020.
This virtual currency, not backed by states or central banks, will be managed by an association of businesses, non-profit organizations and academic institutions.
Here are some features of the project:
Libra will be a digital currency backed by a reserve of real assets, including bank deposits and short-term government securities, and held by a network of depositories.
It has a structure to ensure confidence and stability of its course.
According to the libra white paper, anyone using this currency will benefit from a “high degree of assurance” that they can convert their digital currency into a local currency based on an exchange rate, in the same way as a currency.
However, a libra will not always be converted to the same amount in a given local currency because it is not “pegged” to a specific currency.
Libra will trade on a trading platform, the name of which has not been specified by Facebook.
The libra will be based on blockchain technology, a unique data structure that records transaction and status history over time in a large book shared and managed by a computer network.
Unlike bitcoin, the libra blockchain will have a “permission” system, which means that only entities authorized by the association will be able to run the computers.
However, the association’s goal is to reach a network without permission within five years, while offering a stable and secure ecosystem.
The software will be ” open source “, which means that companies outside the association can create compatible programs.
The Libra Association is an independent, non-profit association of 28 members based in Geneva, Switzerland. She will oversee major decisions regarding the digital currency.
Members of the association include MasterCard, Visa, Spotify Technology, PayPal Holdings, eBay, Uber Technologies, Vodafone Group, as well as venture capital funds like Andreessen Horowitz and Thrive Capital.
To join the association, a minimum investment of $ 10 million is required, with the exception of NGOs.
The association targets 100 members by the time it launches.
Each member has a voice on strategic decisions. Facebook will be a member of the association through its new subsidiary Calibra, which will serve as a purse for librarians while ensuring the separation of social data from financial data.
Individuals and merchants will be able to use Calibra to store, send and receive libras.
Calibra will be offered as a stand-alone smartphone and button-based application in Messenger and WhatsApp products, both properties of Facebook.
Facebook wants Calibra to be able to be used eventually in transactions and online payments on its other applications like Instagram.
Network users will be able to acquire libras via their bank account, and for people without a bank account, by money transfer companies.
Calibra’s engineers are engaged in the creation of the libra blockchain, but Facebook has said it wants to preserve the independence of both entities.
Calibra has approximately 100 employees, most of whom are based at Facebook’s headquarters in Menlo Park, California, and Tel Aviv. Kevin Weil, Calibra’s chief executive, told Reuters he was not planning to significantly increase this workforce.
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